The glory days of long-term-care insurance--designed to protect
you from the cost of late-in-life health problems--may be a thing
of the past. Insurers have hiked up premiums for many policyholders
in the past 18 months, half a dozen companies stopped selling new
policies, and at least two exited the business entirely. Still,
some companies are happy to sell traditional policies if you're
willing to pay the freight, and an increasing number of insurers
are mixing and matching long-term-care coverage with other
financial products to provide new options.

The most common of the new twists involves long-term-care
coverage with life or disability insurance. Variations are all over
the map, but a simple example might involve a $500,000 life
insurance policy with supplemental long-term-care benefits. If you
die without needing long-term care, then your estate gets the full
$500,000. But if you were to spend $100,000 for long-term care in
the final year of life, the death benefit would drop to
$400,000.

The combination policies address a primary concern with
traditional long-term-care policies--that all those premiums
disappear if you don't need the care. The thought of paying
thousands of dollars for coverage you might never need turns off a
lot of potential customers. Also, many combination policies are
single premium, which means you make one upfront payment for the
insurance and don't worry about price hikes later.

New ways to get long-term-care coverage are no magic bullets, of
course. Like every financial product, they will work for some
people and flop for others. They may work best for people who
expect to have more assets than income during retirement. To pay
for the single premium, you'll need a large lump sum up front.
Traditional long-term-care coverage might work better for those
with relatively high net worths and streams of income in retirement
that can handle premium fluctuations.

Financial planning for long-term care is especially complicated
for entrepreneurs who have spent their lifetimes building assets.
So be wary of insurance salespeople pitching the next new thing,
and go over all your options with an advisor you trust.

Scott Bernard Nelson is deputy business editor at The
Oregonian and a freelance writer in Portland, Oregon.

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